CCA 200923038: IRS could not disclose an appraiser's penalty to an estate representative

Plain-English summary

Chief Counsel considered whether the IRS could tell an estate representative that an appraiser had previously been found liable for a section 6701 penalty. That determination was the appraiser's return information because the IRS had obtained or prepared it concerning a penalty under the Internal Revenue Code. Section 6103 therefore barred disclosure unless a statutory authorization applied. The advice concludes that the investigative-disclosure exception did not apply because disclosure was not connected to obtaining information, and the judicial-proceeding exceptions did not apply because the appraiser's penalty lacked the required connection to the estate's return. Consent also appeared unavailable, leaving no identified authorization for disclosure.

Ruling snapshot

• Question: Could the IRS disclose an appraiser's prior section 6701 penalty to an estate representative?
• Outcome: Advice given, no disclosure authorization applied
• Key authorities: IRC §§ 6103(b)(2), 6103(c), 6103(h)(4), 6103(k)(6), and 6701; Privacy Act

Full text (IRS public release)

ID: CCA_2008080515521345 Number: 200923038
Release Date: 6/5/2009
Office: ----------
UILC: 6103.01-00, 6103.02-02, 6103.09- 03, 6103.11-06

From: --------------------
Sent: Tuesday, August 05, 2008 3:52:17 PM
To: ---------------------------------------
Cc: ------------------------------------------------------------------- Subject: FW: Appraiser/Disclosure

A s we discussed on the phone:

The Privacy Act does not limit its restrictions to the disclosure of return information. The Privacy Act applies to information which uses individual identifiers for retrieval. For example, employee personnel information is subject to the Privacy Act's limitations on disclosure, when that information is clearly not return information. This is not really a problem, however, since the Privacy Act disclosures are going to be subsumed, for all intents and purposes, by IRC section 6103.

Second, it is an incorrect assumption that this information is not return information. The fact that an appraiser has been found liable for the 6701 penalty is the return information of the appraiser. IRC section 6103(b)(2) defines return information, inter alia, as information gathered/obtained/received or prepared by the IRS with respect to any tax, penalty, interest, fine, or forfeiture, etc. under the IRC. A determination that someone was subject to a penalty under section 6701 would be return information.

Since this information is return information, it can only be disclosed as permitted by the IRC. IRC 6103(k)(6) does not apply, as the disclosure of the appraiser's penalty information to the estate representative is not tied to our obtaining information in the case. IRC 6103(h)(4)(B)-(C) do not apply, as there is no transactional or return item nexus between the appraiser's penalty and the estate's return. It is unlikely that the appraiser would consent to the disclosure of his previous misconduct, so IRC 6103(c) will not work. I have discussed the issue with Chief Counsel (--------------------------------------) who concurs with this analysis and also could not think of a disclosure authorization that could be used in this instance.

Please let me know if you have any additional questions.

--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
-----------------------